Dian Kuswandini, The Jakarta Post, Jakarta | Sat, 06/14/2008 11:07 AM | Business State Minister for State Enterprises Sofyan Djalil said Friday there is nothing wrong with state officials holding commissioner positions in state enterprises, since they are needed to voice the interests of the people and government. His remarks come amid a flurry of resignations by directors general at the Finance Ministry from commissioner posts at state firms in support of an ongoing reform launched last year by Finance Minister Sri Mulyani Indrawati. The move to relinquish positions on the boards of state firms has gained wide support in a country where incompetent bureaucracy and corruption in ministries are cited in many reports by the World Bank, Transparency International and others, as being detrimental to growth. Sofyan, however, sees it differently. "State firms are the state's assets; any state firm should have a government representative," he said. As a shareholder, the government has the right to post its representatives in state companies to oversee its assets, as part of its responsibility to the public, Sofyan said. Earlier this week, several directors general at the Finance Ministry said they were resigning as commissioners of state firms to support reform and avoid conflict of interest. Included in that group are the director general of taxation, Darmin Nasution, who is also the president commissioner of the Indonesia Stock Exchange, and the director general of budget, Ahmad Rochjadi, who is also a commissioner at state oil and gas firm PT Pertamina and at state pension fund company PT Taspen. This reform aims to help flush out corruption from the Finance Ministry by raising salaries, among other measures. Directors general are then expected to focus on their jobs at the ministry. The Corruption Eradication Commission (KPK) earlier said that top-level civil servants at ministries, including directors general, should avoid doubling up on jobs because it could lead to conflict of interest. Sofyan, however, insisted that there was no conflict of interest caused by the current double jobs. "There is no conflict of interest, but there are parallel interests, meaning that state officials (on boards of state firms) work for the public and government's interests, not for themselves." The secretary to the sinister for state enterprises, Said Didu, admitted the issue of "double jobs" for top state officials is in a gray area and that existing regulations need clarification. "Therefore, the definition of double jobs and conflicts of interest should be made clear in order to avoid controversy," he said. The state ministry, Didu said, would work on a joint decree with the Finance Ministry to formulate a regulation on double jobs. Critics have long said the government should follow international practice in striking a balance between avoiding conflict of interest and protecting the people's and government's interest. Many governments appoint highly competent professionals to represent them in state-owned companies.

Dian Kuswandini, The Jakarta Post, Jakarta | Thu, 06/05/2008 1:14 AM | Headlines In an attempt to speed up the development of the nation's tourism sector, lawmakers are finalizing a draft law on tourism which would require a powerful, above-ministerial level coordinating agency to be established. The draft is being drawn up by the House of Representatives' Commission X overseeing tourism, culture, education, youth and sports issues to amend the existing 1990 Tourism Law. "The aim (of the draft) is to facilitate faster development of the sector. It now contributes Rp 45 trillion to Rp 60 trillion a year in income," said lawmaker Djabaruddin Ahmad on Wednesday. "We want to extend it to more than Rp 200 trillion, making it the second largest contributor to the state income after the oil and gas sector." "Currently, we can lure only five to six million foreign tourists (a year), while Singapore can attract 25 million and Malaysia 20 million. A really big gap, considering the fact that Indonesia actually has more to offer than those countries," he said. The draft also stipulates that an independent agency would be established to take over from the government in regulating the sector. "An independent agency is needed to cut down bureaucracy at the governmental level," Djabaruddin said. Another legislator, Didik Rachbini, said the agency would also coordinate policies in the tourism sector with relevant ministries dealing with culture and tourism, foreign affairs, transportation, public works, agricultural and law and human rights. "The House has proposed the vice president lead this agency," Didik said. "Currently, the cultural and tourism minister leads the sector, but he can't supervise other related ministers as they are at the same level. So, a higher-level official is needed to coordinate them." Two other agencies would also be established under the draft -- one tasked specifically to carry out promotional campaigns and another to coordinate private entities operating in the sector including travel agencies, hotels, restaurants and craft and souvenir makers. The latter organization will be called the Indonesian Chamber of Tourism Industry. Djabaruddin also said the draft would consider the values of the World Tourism Organization (WTO). "Under the WTO paradigm, tourism does not only deal with trade, but also links to efforts to improve the environment, reduce poverty, enforce local communities and strengthen local cultures. It is more holistic and will provide more benefits to the country," Djabaruddin said. Once completed, the draft will be the subject of deliberation between lawmakers and officials from the Culture and Tourism Ministry.

Dian Kuswandini, The Jakarta Post, Jakarta | Tue, 05/27/2008 3:16 PM | Business The government's proposed plan to privatize Krakatau Steel, the country's largest steel producer, continues to stir heated debate at the House of Representatives, with many lawmakers opposing the plan. Members of several major House factions, including the Indonesian Democratic Party of Struggle (PDI-P), the Prosperous Justice Party (PKS), the Democratic Party and the National Mandate Party (PAN), have asked the government to reconsider selling its stake in Krakatau Steel. "I was informed many banks were willing to lend money to Krakatau Steel, so the government should discontinue its plan to sell the company," Andi Salahudin of the PKS said Monday. He was speaking at a hearing of House Commission VI, which oversees state enterprises. Refrizal, another representative, said the government should not sell Krakatau Steel to foreign companies simply to procure more money. "We're against this, as well as the government's plan to privatize Krakatau Steel. It would be better to turn to bank loans. Many banks have expressed interest in financing Krakatau Steel," Refrizal said. Neither lawmaker named specific banks. The government has said it plans to privatize the company, either through a strategic sale or IPO, as a way of improving the company's performance. To date, four overseas companies have shown an interest in acquiring Krakatau Steel: ArcelorMittal and Tata Steel, both from India, BlueScope Steel from Australia and South Korea's Posco. Soekarjo Hardjosoewirjo of the PDI-P questioned the urgency of privatizing Krakatau Steel, saying it is a strategic national asset. "Is it that urgent to sell Krakatau Steel? If the government really needs money for expansion then for what specific purposes? Isn't there any other option to raise money besides privatization?" Soekarjo said. In response, State Minister for State Enterprises Sofyan Djalil said the government had no intention of selling a national asset just for the money. "Please don't look at it that way. The government has no intention of benefiting through this privatization program," he said. He said Krakatau Steel needed funds to expand its business and boost its production capacity in the wake of rising demand for steel. Domestic demand is expected to increase to between 8 and 10 million tons per year by 2012. "Krakatau Steel's current annual production is only 2.5 million tons. Through privatization, we expect to be able to increase production significantly," Sofyan said. Current domestic demand for steel stands at 6 million tons, of which 2 million are imported.

Dian Kuswandini, The Jakarta Post, Jakarta | Mon, 05/26/2008 10:19 AM | Headlines Food retailers in Jakarta maintained their prices following the government's announcement Friday night that fuel prices would be increased by nearly 30 percent, and there was no panic-buying of basic necessities by residents. The Jakarta Post visited several supermarkets and hypermarkets over the weekend and found that the situation was normal. "It is not the first time the government has raised fuel prices. I won't worry as long as markets and grocery stores are not running out of supplies," said Iryani Karim, a homemaker who lives in Meruya Ilir, West Jakarta. She and her husband were doing their monthly grocery shopping at an Alfa market. Another resident, Ilhamsyah, who was shopping at the Carrefour outlet in Permata Hijau, South Jakarta, said he was not concerned because he had not heard any news about the prices of basic necessities going up. "I worry more about having to pay more for the gas I used for my motorcycle to get here," he said. Ilhamsyah, who was shopping with his wife, said the higher fuel prices would make him stick closer to home when shopping. The government increased fuel prices by up to 28.7 percent last Friday to ease the pressure on the state budget from fuel subsidy spending. The announcement was met by protests in various regions in the country, and triggered several public transportation operators to increase fares. Roy N. Mandey, vice president of corporate communication at PT Matahari Putra Prima, which owns the Foodmart supermarket brand, said the fuel price rises would not immediately affect the prices of basic necessities because retailers usually had fixed price agreements with suppliers. "Usually an increase in fuel prices will have an effect in two to three months," he said. Roy said Foodmart introduced a new strategy in the first quarter to deal with rising prices. "We reduced the packaging of the foodstuffs that we sell to make sure customers pay the same amount as before the increase," he said. France-based retailer Carrefour lowered prices of some 50 to 100 items in its stores in response to the announcement of higher fuel prices. Carrefour corporate affairs director, Irawan D. Kadarman, said the store was continuing to offer discounts on fast-moving consumer goods. "We haven't considered increasing prices yet because everything is still normal, including our supplies," Irawan said Saturday. He said there had been no panic-buying at Carrefour stores. Another retailer, Hypermart, also cut its prices on some 50 items. Marketing and merchandising director of Hypermart, Carmelito Regalado, said the retailer decided to lower prices on some food and drink items, cooking oil and detergents. "Instead of increasing prices in our stores, we're cutting prices in order to help the public during difficult times," Carmelito said. Learning from the 125 percent increase in fuel prices in October 2005, he predicted customers would change their shopping habits as the fuel price rises took effect. "While people used to shop four times a month, they might reduce their frequency to once a month, but with bigger purchases," he said.